Philips on track for Vision 2010 with growth in sales and earnings

THE NETHERLANDS: Phillips is on track to achieve its Vision 2010 objectives of doubling its profit target with seven per cent sales growth and Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) increasing 5.6 per cent over successive third quarters.

Philips’ worldwide plan called ‘Vision 2010’ is to grow the business by simplifying its organisational structure into the three areas of healthcare, lighting and consumer lifestyle and more than doubling its profit target by 2010. Philips stated that the aim of Vision 2010 is to, “further position Philips as a market-driven, people-centric company with a strategy and a structure that fully reflects the needs of its customer base, while also increasing shareholder value.”

In the company’s quarter three financial results released October 15, Philips reports that comparable sales increased by seven per cent to EUR 6,524 million, driven by growth in the consumer businesses and in key emerging markets.

Philips reported that EBITA grew to EUR 438 million, or 6.7 per cent of sales, compared with EUR 71 million, or 1.1 per cent of sales, in Q3 2006.

Also, net income amounted to EUR 331 million — this is down from the Q3 2006 net income of EUR 4,241 million, which Philips stated was largely attributable to the company’s sale of its semiconductors division.

“Q3 was another quarter of improved year-on-year performance for Philips,” said Royal Philips Electronics president and CEO, Gerard Kleisterlee.

“Sales increased by seven per cent while EBITA rose to EUR 438 million, taking our EBITA margin to 6.7 per cent for the quarter. It’s particularly encouraging to see impressive growth in areas that have become, and will continue to be, increasingly important for our company, such as the key emerging markets of Latin America, China and India.

“Results at Medical Systems, while still a strong contributor to group earnings, were adversely affected by the further contraction of the imaging systems market in North America, largely due to the impact of the US Budget Deficit Reduction Act. However, the performance of Medical Systems improved in all regions outside of the United States and in businesses such as Ultrasound & Monitoring and Customer Services within the US.

“In Lighting, we continued to capitalise on our strong position in energy-efficient lighting solutions, and we will continue to grow our business in this area going forward. In our consumer businesses, we benefited from the recent introduction of a number of innovative and exciting new products, positioning our new Consumer Lifestyle sector for a winning start.